- Pound (GBP) falls after gains yesterday
- UK composite PMI fell to a 2.5-year low
- Euro (EUR) gains after the manufacturing PMI improved
- Eurozone composite PMI showed stagnation
The Pound-Euro (GBP/EUR) exchange rate is rising on Wednesday after gains yesterday. The pair rose 0.68% in the previous session, settling on Tuesday at €1.1695. It traded between €1.1610 and €1.1696. At 17:00 UTC, GBP/EUR is trading -0.16% lower at €1.1676.
The pound is pulling against the euro and the US dollar after data showed UK business output slumped in April, the first signs of the impact of Trump’s tariff chaos on the UK economy.
The closely watched UK composite PMI reading, which is considered a good gauge for business activity, fell sharply in April to 48.2, down from 51.5 in March. The level 50 separates expansion from contraction.
Businesses reported lower demand from abroad, with new work falling at the fastest pace in five years. Respondents to the survey also shared concerns over subdued confidence in domestic markets.
April’s output decline was the largest recorded for nearly 2.5 years and is consistent with GDP falling at the rate of 0.3%.
The pound is rising against the euro but is falling against the US dollar after eurozone PMI data, which showed that manufacturing unexpectedly improved.
The manufacturing PMI increased to 48.7, up from 48.6 and ahead of the 47.4 forecast, without output hitting a near 3-year high despite new US tariffs. However, the services sector drank to naval growth as the services PMI dropped into contraction at 49.7, down from 51 previously. The composite PMI showed stagnant growth at 50.1, down from 50.9 in April, marking a 4-month low.
The ECB could find some comfort from the report’s inflation signals. While input costs in services remained elevated, the pace of selling price increases eased, and the good sector input prices fell first after prices showed any sort of modest increase.
The ECB cut interest rates by 25 basis points in the April meeting and may cut again in June.
